Elevated interest rates have adversely impacted the current risk profile of commercial real estate, PERE heard from the global head of real estate at one of the world’s biggest institutional investors on the sidelines of the annual PERE Network Asia Summit.
Base rates in major Western economies rose by as much as 500 basis points in well under a year in 2022, dramatically impacting private real estate capital markets both in terms of capital raising and deployment. Navid Chamdia, who leads the real estate investment activities at Qatar Investment Authority, said: “That has affected the risk profile of real estate assets.”
“But, overall, that has led to far more opportunities for long-term investors like us,” he added. Chamdia said QIA was not seeing notable discounts in the asset classes it favored, which include logistics and data centers. But he added higher costs of capital had thinned the competition for deals it was pursuing.
He said the investor’s data centers strategy was driven by cities which it regarded as “knowledge hubs” where there was “huge demand for cloud storage,” whereas in logistics, QIA was driven, in large part, by the quality of its investment partner. Chamdia exemplified this with an investment it has made in the Vietnam logistics strategy of manager ESR Group.
Overall, he said the firm was looking beyond traditional risk-return profiles, particularly when considering non-fund investments. “As a sovereign, we can take a longer-term view.”
“We still need a business plan with timings,” he said, but in terms of entry points to deals, “at the same time we can enter at times others might choose not to.”
Chamdia also shared insight into QIA’s position on artificial intelligence and ESG.
QIA currently sits fifth in PERE’s annual Global Investor 100 ranking, with $56.05 billion of equity invested in private real estate, equivalent to 11.8 percent of its total assets.
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